Banks warned it was “unacceptable” to withhold funds from companies in the Covid-19 crisis

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The government has warned banks that it would be “totally unacceptable” to withhold funds from good companies struggling because of the coronavirus epidemic.

Business secretary Alok Sharma said banks should support businesses during the crisis in the same way that they were supported by the taxpayer in the 2008 global financial crash.

His intervention followed a warning that nearly a million small businesses could run out of cash in the next four weeks after struggling to access government assistance for emergency loans against coronavirus, widely criticized.

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Composite photos of Bournemouth Beach on 6/28/19 (top) and Monday 3/3/20 (bottom), the day Prime Minister Boris Johnson locked the UK to help to curb the spread of the coronavirus.

Composite photos of the National Gallery in London in Trafalgar Square on 01/28/14 (top) and Tuesday 3/24/20 (bottom), the day after Prime Minister Boris Johnson locked the UK out to help curb the spread of coronavirus.

A composite image of the London platform Canary Wharf Jubilee Line on 1/31/13 (top) and Tuesday 3/24/20 (bottom), the day after Prime Minister Boris Johnson brought the UK in lockout to help curb the spread of the coronavirus.

Composite photos of London Tower Bridge on 3/16/20 (top) and Tuesday 3/24/20 (bottom) the day after Prime Minister Boris Johnson locked the UK out to help check the spread of the coronavirus.

A composite image of commuters at London Waterloo station on 3/12/20 (top) and Wednesday 3/25/20 (bottom), after Prime Minister Boris Johnson locked the UK -out to help curb the spread of coronavirus.

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A composite image of commuters crossing the London Bridge on 3/13/20 (top) and Wednesday 3/25/20 (bottom), after Prime Minister Boris Johnson locked the UK to help stop the spread of the coronavirus.

Composite photos of Buckingham Palace in London during the changing of the guard on 3/13/20 (top) and Tuesday 3/24/20 (bottom), the day after Prime Minister Boris Johnson set the Kingdom Locked out to help curb the spread of the coronavirus.

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Composite photos of ticket holders for Harry Potter and the Cursed Child queuing outside the Palace Theater, London on 12/03/20 (above), and the theater on Tuesday 24/03/20 (below) Prime Minister Boris Johnson has locked the UK out to help curb the spread of the coronavirus.

A composite image of London’s Canary Wharf station on 3/17/20 (top) and Tuesday 3/24/20 (bottom), the day after Prime Minister Boris Johnson locked the UK to help stop the spread of the coronavirus.

A composite image of the streets of central Bath occupied by visitors and buyers on 3/11/20 (top) and the empty streets on Tuesday 3/24/20 in the aftermath of Prime Minister Boris Johnson brought the UK locked out to help curb the spread of coronavirus.

A composite image of visitors to Leicester Square, London, on 03/13/20 (top) and Wednesday 3/25/20, (bottom), after Prime Minister Boris Johnson locked the UK -out to help curb the spread of the coronavirus.

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A composite image of the streets of central Bath occupied by visitors and buyers on 3/11/20 (top) and the empty streets on Tuesday 3/24/20 in the aftermath of Prime Minister Boris Johnson brought the UK locked out to help curb the spread of coronavirus.

Composite photos of the Edinburgh Royal Mile on 03/14/20 and Saturday (03/21/20) after bars, pubs and restaurants have been closed. Prime Minister Boris Johnson locked the UK out on Monday evening to help curb the spread of the coronavirus.

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Composite photos of people on the beach at Barry Island in South Wales on 06/19/17 (top) and Wednesday 3/25/20 (bottom) after Prime Minister Boris Johnson has Locked out the UK to help curb the spread of the coronavirus.

A composite image of the streets of central Bath occupied by visitors and buyers on 3/11/20 (top) and the empty streets on Tuesday 3/24/20 in the aftermath of Prime Minister Boris Johnson brought the UK locked out to help curb the spread of coronavirus.

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A report by the Corporate Finance Network of accountants predicts that almost a fifth – 18% – of the five million British small businesses will not be able to survive next month despite the taxpayer-backed loan scheme.

This could see nearly four million workers lose their jobs in May, he warned, adding that up to 42% of small businesses could go bankrupt if the foreclosure lasted four months or more.

Speaking at daily press conference No. 10, Sharma acknowledged that the program “would not be perfect from the start” and confirmed that Chancellor Rishi Sunak would make changes in the coming days.

At the same time, he said that Mr. Sunak, the Governor of the Bank of England and the Financial Conduct Authority had made it clear to banks that the benefits of the loan program were “passed on to businesses and consumers”.

“It would be totally unacceptable for banks to unfairly deny funds to good companies in financial difficulty,” he said.

“Just as the taxpayer stepped in to help the banks in 2008, we will work with the banks to do their utmost to repay this favor and support UK businesses and citizens when needed. “

Earlier, the Treasury insisted that “hundreds” of loans had already been made through the program which came into effect last week.

“Obviously, different banks operate in different ways, but there has been a lot of cash flowing,” said a spokesperson.

However, lenders have come under heavy fire amid allegations of unfair lending tactics, with some demanding personal guarantees from business owners and others seeking to apply high interest rates after the initial period with no interest rates. interest ended.

Parts of small businesses have complained that the program is difficult to access and that it is not a level playing field, with banks enjoying too much leeway.

The coronavirus loan program is designed to provide businesses with up to £ 5 million interest-free in the first year to help consolidate their businesses.

The government has pledged to underwrite 80% of bank loan risk to encourage banks to lend to troubled businesses.

But it emerged last week that many large lenders are demanding that business owners give personal guarantees that could see their assets foreclosed, while others are pushing their own financial products before emergency loans.

Federation of Small Business President Mike Cherry said the treasury needs to ensure that lenders “do everything” to make emergency financing available to businesses that need it.

“We cannot have a situation where banks are approached by successful small businesses and lenders are offering products as usual,” he said.

“It’s not as usual. Millions of fantastic small businesses are falling apart. “

Kirsty McGregor, founder of The Corporate Finance Network, said: “To save a large percentage of the UK economy and keep nearly four million people employed, we need to encourage and facilitate 250,000 transactions in the coming weeks . “



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